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Consensus Magazine:The Prime Time for Manufacturing and Blockchain is Yet to Come

Recently, Consensus Magazine published an article on manufacturing and blockchain. The article talks about the prospect of applying blockchain technology to manufacturing industry from the perspective of the incorporation of blockchain into supply chains, and it also points out the present bottlenecks many businesses are confronting nowadays, indicating that although the prime time of the integration of manufacturing and blockchain is yet to come, this technology will undoubtedly exert far-reaching influence on the manufacturing industry. Unitimes group would like to share with you the main contents of this article.

Since the Industrial Revolution in the 18th and 19th centuries, manufacturing has exponentially increased in volume and demand; supply chains have grown ever more complex, and industry has progressively required less direct manual labor. To add even more complexity, we now have a need not only for supply chain management (SCM) but also for business process outsourcing, as well as for corporate social responsibility and sustainability. To succeed, one must continuously innovate and keep up with a rapid technological change.

One outcome of this radical uncertainty for businesses is that they face an increasingly wide and diverse cast of counterparties, which is forcing them to rethink their trust infrastructure. Existing, time-consuming approaches to compliance and on-boarding can’t keep up.

Blockchain technology, with its decentralized, consensus-based approach to proving the veracity of each users claims and statements, offers a promising solution-with the added bonus that it might also foster a more equitable world. Manufacturers cannot depend on blockchains alone to make their operations more manageable-no one technology or business model will singlehandedly solve these issues-but they should all be looking closely at their potential.

A challenging environment

Businesses that can’t adapt will be surpassed as their competitors deploy new tools, such as the Internet of things, predictive analytics, satellite data, and blockchain itself. These technologies drive efficiency but are also forcing transparency.

Blockchain technology seeks to address these problems via a common data architecture that lets non-trusting parties more securely share information. Blockchains are designed to permanently record transactions–not merely currency transactions but, importantly, also in exchanges of data –in such a way that the record cannot be tampered with. This stands in contrast to centralized databases, which can be altered after an entry has been made.

This unique design means that blockchains can enhance trust among organizations and add another layer of security and reliability to a supply chain’s information system. By deferring questions of trust to a decentralized algorithm that no one party controls, they promise to both advance transparency along existing supply chains and allow for more fluid, dynamic supply chains in general. For producers and consumers alike, the gains could be manifest in improved traceability of goods and work processes and, ultimately, in greater efficiency and lower costs.

Blockchain’s Benefits

A much-discussed facet of blockchain-based SCM is that tamper-evident distributed ledgers can potentially improve traceability and establish the provenance of goods from start to finish. Tracking of the sourcing of raw materials, the countries of production, inspections, transit methods, duration and environmental factors can all be updated instantly to a blockchain that is transparent and trustworthy.

Another exciting supply-chain advantage of blockchains lies in how businesses can manage ever-more-valuable data. In today’s 4th Industrial Revolution, where data is becoming the true gold, it will increasingly need to be exchanged in efficient and collaborative ways.

Much of it will be generated by automated devices, ensuring that the Internet of Things will need an accompanying “Ledger of Things” to keep track of machine-to-machine exchanges of valuable information. In other words, it will need a blockchain.

When information is protected through this secure, multiparty system, “data collateralization” is made possible, giving lenders and big companies the confidence to inject financing and other forms of liquidity into supply chains. This could in turn help smaller suppliers overcome their persistent working capital challenges.

When combined with rapid developments in IoT, this technology will eventually lead to full transactional autonomy for machines. They will manage their own digital wallets loaded with cryptocurrency or specialized supply-chain tokens.

Consider this scenario: A machine could run its own predictive analytics, conclude that a replacement part is needed by a certain time and then automatically place an order and pay for the part through a pre-established smart contract with a parts supplier. Imagine the cost and time savings that would afford.

Adoption? Not so easy

So far, much of the potential for blockchain solutions for SCM remains theoretical. The jury is still out on whether blockchain technology actually is the fix it promises. We’re awaiting the results of pilots by IBM, Maersk, GE and others. Blockchain advocates talk enthusiastically about reducing waste, increasing efficiency and providing greater control over supply chains, all because the technology can boost business partners’ capacity and willingness to share information.

Yet while SCM experts often decry the fact that supply chains are overly complex and inefficient, many companies tend to view the status quo as acceptable, repeating the mantra, “If it’s not broken, why fix it?” In reality, the problem is that innovation is difficult for established players, especially when it threatens to disrupt existing work processes in which many jobs and incomes are connected.

Paradoxically, although a blockchain could make information-sharing much easier across a complex set of parties, overcoming the trust challenges across so many parties makes it hard to implement the technology in the first place.

We should also note that blockchains, which depend upon multi-computer networks, are inherently slower than centralized databases. If speed is a greater priority than any problem of mistrust in the database manager, a blockchain may not be the best fit, at least within the technology’s current state of development.

Looking to the Future

What we can say is that widespread adoption of blockchain ledgers could have widespread benefits for the global economy, especially if it helps establish new standards in trade and manufacturing.

We could achieve much higher levels of security protection for sensitive data, with a model that’s superior to both firewalls and non-disclosure agreements. And, by extension, if we can create a more secure environment for communicating with each other, greater cross-business collaboration and engagement become possible, which accelerates innovation and opens up new business opportunities.

What’s also certain is that there is an unprecedented speed of change in this and other technologies aimed at the manufacturing industry. The question for any company leader confronting this environment is: how to ignite urgency within their organization and incentivize their employees to be entrepreneurs within, so that they keep up with technological and business changes.

Customers today are requiring faster, safer delivery, consistency, security, reliability, accountability and quality. Blockchains have significant potential to help businesses comply with those demands.

 

Link of the article:https://www.coindesk.com/manufacturing-blockchain-prime-time-yet-come/

Editor:Hulin

【The article was published only for the purpose of sharing the blockchain technical content. The copyright belongs to the original author. The viewpoint only represents the author himself. It does not mean that Unitimes approves its opinion or confirms its description.】